Business

“They Just Take Big Hits:” Fires Latest Disaster for Calif. Cannabiz

avatar Hilary Corrigan / Aug 24, 2020

It’s too early to gauge the full impact California’s wildfires will have on the cannabis industry. But growers reporting burned farms and ruined crops can’t count on support from traditional sources like the government or insurance policies.

Lightning strikes starting in mid August sparked more than 615 wildfires, burning more than 1 million acres across the state, according to the California Department of Forestry and Fire Protection. CalFire has reported seven deaths connected to wildfires.

The devastated areas include sites in Monterey, Napa, Sonoma, Lake and other northern California counties home to cannabis farms. Some farms have reported their crops destroyed, though the extent of the damage has not been tallied.

Without much institutional assistance, cannabis industry participants are relying on their well-honed traits of self-reliance and communal support.

“It’s really up to the community,” Shannon Hattan, co-founder and CEO of Sonoma County-based grower Fiddler’s Greens and High Tide Distribution, said of the response. “We’ve never been able to rely on government help.”

Her husband Cameron Hattan, Fiddler’s co-founder and vice president of business development, said they have been lucky because the recent fires have not directly hit their operations. But they’re hosting friends who have been evacuated and they’ve heard of damage to a farm in the area. Cameron Hattan noted that growers are used to not having access to standard utilities, plumbers and electricians, banking and other services—and tend to rally around each other in natural disasters.

Shannon Hattan serves as a board member for the Sonoma County Growers Alliance and expects the board will meet soon to discuss the fires’ impacts and ways to help growers who have been harmed.

“Hopefully, we’re through the worst of it,” she said, noting less of the lightning that sparked blazes.

Crop concerns

Cannabis cultivator HerbaBuena has farms in Mendocino County that “at the moment, have maintained some safety from both fire and smoke damage,” founder Alicia Rose said. But Sonoma and Lake county areas “have been hit incredibly hard.” She has heard of a couple of farms destroyed.

She noted that even for farms that don’t burn, smoke damage can harm sun-grown plants that are ripening early. Plants ripening later can withstand it. “The entire crop is not lost,” Rose said.

Previous fires have prompted the cannabis community to pull together, bringing plants, materials and other resources to help growers resume operations, Rose said. She expects a similar response this time. “There’s not many other options.” 

“They just take big hits”

Property insurance can cover some wildfire damage for cannabis businesses, according to Doug Esposito, head of cannabis practice at Owen-Dunn Insurance Services. That includes indoor grows and cannabis crops that are brought indoors after being grown outside, as long as facilities meet requirements in their policies, such as having proper fire alarms installed.

But insurance does not usually cover outdoor cannabis grows.

“There really is almost no coverage” for outside crops, Esposito said. He has heard it’s sometimes available, but at a very high cost. “It’s almost non-existent.” 

He recalled losses to farms from the 2017 fires throughout the Santa Rosa area. “They just take big hits” and hopefully survive, he said, expecting the same this time. “They’re at the whim of the California forest fires.”

He noted that it’s getting more difficult in general—not just for the cannabis industry—to get wildfire coverage as California’s fires worsen. He urges people to know the details of their policies, ask questions, “read the policy, check the fine print and really know what you’re buying.”

Associations’ response

Josh Drayton, communication and outreach director for the California Cannabis Industry Association, said in an email that it was too early for the association to answer questions about the number, locations or types of cannabis businesses impacted so far, or about the help that the association and the industry offer to impacted businesses.

“What we know is that many cannabis operators throughout the supply chain are located in areas directly affected by the wildfires. These operators have been evacuated, and as the fires continue to rage, the damage has not yet been assessed.  We know that there will be tremendous damage to cannabis businesses,” Drayton stated. “In a year plagued by the covid-19 state of emergency, organized robberies, and lack of relief at both the state and federal levels, we know that these fires will be detrimental to many operators.”

In an email, National Cannabis Industry Association Media Relations Director Morgan Fox said the impact would depend on the fires’ location and how long they last.

But Fox highlighted concerns “that cannabis businesses and supply lines are already being impacted by the pandemic, and are not in as good of a position to deal with additional setbacks or disasters.”

“Limited access to capital and financial services such as insurance are going to severely hamper the ability of businesses in areas affected by wildfires to bounce back,” Fox stated. He noted that NCIA hosted a wildfire relief fundraiser a few years ago to help raise money for businesses impacted by wildfires then, but was unsure about such efforts this year, especially with the current state of the economy.

Fox also pointed to a New Frontier website post from late last year. The cannabis data analysis firm noted that even after fires are contained, smoke and soot can damage plants. And related power outages can ruin crops. The firm notes that California produces 58% of the cannabis cultivated in the U.S. Supply losses can strain the legal market and wind up bolstering the illegal market.

Humboldt County has not experienced severe fires this season, said Natalynne DeLapp, operations director for Humboldt County Growers Alliance. But people there are watching weather advisories and remain prepared, she said, with evacuation plans, fire-fighting equipment and stored water.

“We have been very lucky,” she said. “We’ve been spared so far.”

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